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Thursday, August 31, 2017

The Trump administration plans to deeply cut Obamacare outreach and advertising, officials announced Thursday. They will reduce Obamacare advertising spending 90 percent, from the $100 million that the Obama administration spent last year to $10 million this year, and cut the budget for the in-person enrollment program by 41 percent. Taken together, this represents a 72 percent cut to efforts to enroll eligible Americans into health law programs.

— Moved to gut two major Obama-era regulations reviled by the industry that would have cut off funding to low-performing programs and made it easier for defrauded students to wipe out their loans;

— Appointed a former for-profit college official, Julian Schmoke Jr., to lead the team charged with policing fraud in higher education — one of a slew of industry insiders installed in key positions. Schmoke is a former dean at DeVry University, whose parent company agreed last year to pay $100 million to resolve allegations the company misled students about their job and salary prospects;

— Stopped approving new student fraud claims brought against for-profit schools. The Education Department has a backlog of more than 65,000 applications from students seeking to have their loans forgiven on the grounds they were defrauded, some of which date to the previous administration.

Wells Fargo now says it has found a total of up to 3.5 million potentially fake bank and credit card accounts, up from its earlier tally of approximately 2.1 million. The additional fake accounts were discovered by a previously-announced analysis that went back to January 2009 and that reviewed the original May 2011 to mid-2015 period.

This article by C. Ryan Barber (possibly behind a paywall) explains that Rep. Jeb Hensarling keeps asking Consumer Financial Protection Bureau head Richard Cordray whether he's going to serve out his term or resign to run for Ohio governor:

U.S. Rep. Jeb Hensarling can ask, and ask, and ask again. But Richard Cordray, director of the Consumer Financial Protection Bureau, has no plans of telling the Texas Republican whether he plans to resign anytime soon to pursue his rumored interest in the Ohio governorship. Hensarling, chairman of the House Financial Services Committee, sent Cordray a letter Mondaysetting a Wednesday deadline for the CFPB chief to state whether he plans to resign to run for governor before his five-year term expires in July 2018. Cordray, a former attorney general of Ohio, responded Wednesday—“in accordance with [Hensarling’s] stated deadline,” he wrote—but his answer was the same one that has so frustrated Hensarling in the past. [That is, he just won't say.]

Wednesday, August 30, 2017

A Washington Post column reminds us: "Today marks your final opportunity to submit comments to federal regulators who want to undo the government's net neutrality rules for Internet providers, in a move that could have sweeping implications for the future of the Web. The push to weaken or eliminate the rules has been met with praise from industry officials who argue that deregulation will support renewed investments in America's Internet networks, while consumer groups have slammed the proposal as a handout to big businesses and a potential threat to consumer choice. The looming deadline reflects the end of the Federal Communications Commission's public comment period — a weeks-long window during which regular Americans can weigh in on agency proposals — on the issue."

What is net neutrality, again? It is the idea that Internet providers (Comcast, Verizon, etc.) shouldn't be allowed to arbitrarily manipulate Internet content traveling across their networks. Instead, all websites, applications, and services should be equally accessible to the consumer and not slowed down, blocked or subjected to extra fees before it reaches your screen.

The full piece, including a primer on what the issue is and why it matters, is here.

Tuesday, August 29, 2017

Beachbody, one of the world’s largest sellers of exercise videos, supplements, and weight-loss programs, has agreed to change its website and sales practices to better protect consumers. The Santa Monica-based company, which claims over 23 million customers, also will pay $3.6 million in penalties and restitution as part of a final court judgment. The judgment was negotiated with the Santa Monica City Attorney’s Office after lengthy discussions, which followed the prosecutors’ investigation of consumer complaints.

The Santa Monica City Attorney’s Office learned that Beachbody was charging its customers’ credit cards on an automatic, recurring basis for renewals of products and services, without their express prior consent as required by law.

The judgment includes a permanent injunction requiring full transparency with consumers. Before automatically renewing charges, Beachbody now must:

Clearly and conspicuously disclose the renewal terms

Get consumers’ consent, through a separate check-box (or similar mechanism) that does not include other terms and conditions

Send a clear summary of the renewal terms after consumers pay

Allow consumers to cancel easily, both online and by phone

Send reminders of upcoming renewals for all subscriptions 6 months or longer

Costco’s TruNature Gingko labels represent that the product “supports alertness & memory,” that “Gingko biloba can help with mental clarity and memory,” and that “[i]t also helps maintain healthy blood flow to the brain to assist mental clarity and memory, especially occasional mild memory problems associated with aging.” Plaintiff alleged that these were false or misleading under the UCL and CLRA. Relying on In re GNC Corp., 789 F.3d 505 (4th Cir. 2015), the court here found that this was an impermissible lack-of-substantiation claim, and that therefore a private plaintiff can never prove falsity “when a defendant offers scientific evidence and admissible expert testimony supporting an advertising claim about the efficacy of the product in question.” To prove falsity, all reasonable experts in the field must agree that the representations are false. The court found that California would follow GNC, because no state court cases have rejected it, but I doubt that....

She concludes:

What the GNC line of cases is really saying is that courts will not engage in the very process they’re constituted to engage in if a consumer protection case requires a factfinder, as the court makes clear when it says “under California law a Plaintiff cannot maintain a false advertising claim when the defendant offers admissible expert testimony and scientific evidence supporting the advertisement in question.” That is, the court will only look at one side of the evidence; I would call that not very judicious. And by the way, this formulation means that in fact there is a substantiation requirement under California law—just one in which the quality of the substantiation is judged by a minimal standard, that of admissibility. When a rationale for a rule makes the rule a failure on its own terms, there is something deeply wrong.

"The Politics of Arbitration Law and Centrist Proposals for Reform", 53 Harvard J. on Legislation 711 (2016), explained how issues surrounding consumer, and other adhesive, arbitration agreements became divisive along predictable political lines (progressive vs. conservative) and proposed an intermediate (centrist) position to resolve those issues. However, "The Politics of Arbitration Law" did not argue the case for this centrist position. It left those arguments for two more articles: (1) "The Centrist Case against Current (Conservative) Arbitration Law", 68 Florida Law Review 1227 (2016), which argued against the overly-conservative parts of current arbitration law; and (2) this Article, which argues against progressive proposals to repeal, not only the overly-conservative parts of current arbitration law, but also the parts of current arbitration law that should be retained. While progressives would prohibit enforcement of individuals’ adhesive arbitration agreements, this Article argues that such agreements generally should be enforced.

Georgetown law prof Adam Levitin has penned this article in American Banker (and a similar piece for Credit Slips). (The American Banker version may be behind a paywall.) State usury laws generally are preempted by the National Bank Act when a loan is held by a national bank. But, as Levitin notes, "[o]nce the note leaves the hands of a national bank, the state usury law applies as it always would." Thus, in 2015, the Second Circuit ruled in Madden v. Midland Funding "that National Bank Act preemption of state usury laws applies only to a national bank, and not to a debt collector assignee of the national bank." Levitin explains that any other rule would be a very bad deal for consumers and why pending legislation to undo the general rule (and Madden), called the Protecting Consumers Access to Credit Act of 2017, should be rejected.

The president of KidsandCars.org, Janette Fennell, explains: "Under the guise of 'reform,' a bill called the Regulatory Accountability Act (RAA) would add a maze of additional bureaucracy to the life-saving protections. Instead of making it easier to implement protections, the RAA is a recipe for more red tape and additional layers of bureaucracy in a process meant to protect our health and safety. But it’s not just vehicle safety at risk, it’s consumer protections across the board, from those governing dangerous chemicals, to workers’ protections, to food safety."